Upfront Cost of Installing Solar at Home

California-based Sunrun and Harris Interactive recently announced the results of a survey of 2,211 adults (1,475 homeowners) about the cost and desirability of installing a home solar system. The main sound bite is the one-liner that “97% of Americans overestimate the cost of going solar,” as well as the stat that “nearly 8 out of 10 of those who do not already have solar panels say they would install solar if cost were not a factor.”

The survey asked respondents to guess: ** the actual cost to install solar panels with solar power service on an average-sized home.**

You may disagree but I view this as a trick question to see if anyone really knows what a “solar power service” is. That is to say, only 3% responded with what could be seen as a correct answer of “less than $1,000.”

With a solar power service – i.e., third-party owned solar in the form of a solar lease or a power purchase agreement, depending on the state – the purchaser doesn’t own the panels, so the upfront cost to the homeowner is nominal compared to purchase cost of the same system. With a solar power service, one could “go solar” without buying the panels.

As a side note, it’s hard to tell if the question clarifies whether “actual cost” is viewed from the homeowner’s perspective or from the installer perspective. Regardless of purchase, lease, or other financing, the actual cost is what it is – someone pays for the solar panels and that someone is probably the homeowner in the form of a lease or power purchase payment over time.

In any event, Sunrun found that nearly eight out of 10 homeowners who do not already have solar panels would install solar if cost were not a factor. That to me is another way of saying: if the solar panels were free, would you like to have them? Most likely (unless you’re thinking nothing in this world is free), the answer is yes.

Seems like the real takeaway from the survey is many Americans have no idea how solar panels can be leased or financed under various contractual models that tie into state laws. And this lack of familiarity means the decision to “go solar” should be made after diligence, investigation, and full understanding.

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12 Comments

I think even when people are presented with the facts of the cost and acknowledge that it’s a financially smart idea, they still aren’t prompted to action. I’m not entirely sure why. They seem to think there’s still some voodoo or catch involved.

For me, even when financing the entire cost of my home’s soon-to-be-installed net-zero PV array (@ 3.3%), my return on investment is still roughly 14% annually. For me, this is due largely to current Federal and State incentives available. Considering the best guaranteed investments right now are only returning sub 1% interest rates (CD’s or savings accounts) – rooftop solar power represents an amazing financial product. One that is tangible, helps the planet, provides local jobs, and eliminates my annual power bill.

I wonder why there aren’t companies out there marketing this as an *actual* investment: that is, not that you’re investing by putting up solar panels on your own house, but giving people the chance to invest their money by paying for solar panels on other people’s houses. From a ROI point of view, as you point out, it’s a no-brainer.

It’s much more than understanding the costs and/or purchase options available. In many cities there are no lease options, so the total cost is on the homeowner and if you’re looking at an off-grid system, that cost is substantial. I know because I priced a typical system for my last home at $40k+ from multiple companies. Averaging that out it would take 20 years to get a ROI.
Aside from this there is the issue of homeowner’s associations, local planning authorities and historic review boards that simply will not allow these systems to be installed because they violate some ordinance or other that was crafted before the advent of solar power. The same goes for wind turbines. Where I live in Florida these systems are not allowed on a roof if they will be in view of the main street….which is every single home here.

It’s much more than understanding the costs and/or purchase options available. In many cities there are no lease options, so the total cost is on the homeowner and if you’re looking at an off-grid system, that cost is substantial. I know because I priced a typical system for my last home at $40k+ from multiple companies. Averaging that out it would take 20 years to get a ROI.
Aside from this there is the issue of homeowner’s associations, local planning authorities and historic review boards that simply will not allow these systems to be installed because they violate some ordinance or other that was crafted before the advent of solar power. The same goes for wind turbines. Where I live in Florida these systems are not allowed on a roof if they will be in view of the main street….which is every single home here.

In many states, like Colorado for instance, it is illegal for HOAs or historic boards to disallow solar systems unless they are a legitimate eyesore. Mounting them flush to a roof does not constitute an eyesore. Wind power can be an issue because most windmills tend to be noisy.

I agree that the ROI is often very low unless local/regional tax incentives are available. Another factor is the availability of “Net Metering” (not available in most areas of Florida) which makes the economics a good deal better…

I agree that the ROI is often very low unless local/regional tax incentives are available. Another factor is the availability of “Net Metering” (not available in most areas of Florida) which makes the economics a good deal better…

I agree that the ROI is often very low unless local/regional tax incentives are available. Another factor is the availability of “Net Metering” (not available in most areas of Florida) which makes the economics a good deal better…

Purchased Power Agreements are a great way to bring solar to more people. They can also help local power companies “shave” the peaks off their required load. However, my local power company, Georgia Power perceived this as a threat. In fact the just suppressed a proposed amendment to a GA state law that would have made PPAs legal. What are the laws regarding PPAs in Utah?

Based on our Customers last year in Utah the average system we installed was around $16,000 up front and about $5,000 after Tax incentives incentives and rebates were applied. This was mostly due to the Cap that was set on the rebate. Great article! Thanks, Preston! Terry Beever Sunlight Solar Systems

Based on our Customers last year in Utah the average system we installed was around $16,000 up front and about $5,000 after Tax incentives incentives and rebates were applied. This was mostly due to the Cap that was set on the rebate. Great article! Thanks, Preston! Terry Beever Sunlight Solar Systems